SolarCity bonds plunge after disappointing loss; EZCorp adds as shares pop

By Rebecca Melvin

New York, May 10 – SolarCity Corp.’s convertibles plunged in active trade on Tuesday as the common shares plunged 21% on the heels of the San Mateo, Calif.-based solar panel company’s larger-than-expected first-quarter loss and cut in current quarter and full-year guidance.

SolarCity’s 2.75% convertibles due 2018 fell more than 10 points to about 60, and the SolarCity 1.625% convertibles due 2019 fell about 5 points to 55ish.

SolarCity shares were down about 25% at $17.00 at late morning but closed down at a slightly higher $17.82, which was down 21%.

SolarCity reported an adjusted loss that was much greater than expected on revenue that was better than expected. The solar company reported an adjusted loss of $2.56 per share, which was larger than the year-earlier loss of $1.52 per share.

The SolarCity bonds were among the most active in the convertible space on Tuesday.

SunEdison Inc., the bankrupt renewable energy company, which has seven convertible bond issues, saw its newest 5% convertibles that priced earlier this year trade unchanged on Tuesday at just 5, a Connecticut-based trader pointed out.

Elsewhere, PRA Group Inc.’s convertibles also took a leg lower after the Norfolk, Va.-based financial and business service company reported earnings that missed estimates and which sent the common shares down $5.77, or 19%, to $25.04.

The PRA Group 3% convertibles were indicated lower at 76.5, compared to 83.75 previously, according to a market source.

Moving in the opposite direction, EZCorp Inc.’s convertibles traded up about 3 points in the early going on Tuesday as shares surged after the Austin, Texas-based pawn store operator reported a loss tied to its sale of the Grupo Finmart unit.

The EZCorp 2.125% convertibles due 2019 traded at 78, which was up from 75.25 last, according to Trace data. EZCorp shares were up 69 cents, or 15%, to $5.45.

EZCorp reported a fiscal second-quarter loss of $74.1 million, or $1.35 per share, compared to a profit notched in the same period last year, on revenue of $201.9 million. Adjusted earnings came to 7 cents per share.

Despite another improvement in oil prices to just under $45 per barrel for the front month of West Texas Intermediate crude oil on the New York Mercantile Exchange, oil and natural gas convertibles were mostly quiet on the day. But Chesapeake Energy Corp. saw limited trading of its bonds and the Chesapeake 2.5% convertibles due 2037 bumped up to 87.5, which was up from 86 previously. The Cheniere Energy Inc. 4.25% convertibles due 2045 bumped up to 55.61 from 55.25.

The major U.S. stock indices each ended higher by about 1.25%, with oil names helping lead gains. But convertibles players did not trade oil names actively in tandem with higher share prices.

SolarCity drops with shares

SolarCity’s 1.625% convertibles due 2019 bounced around at lower levels on Tuesday and ended close to their lows in active trade, or at 55.325 versus an underlying share price of $17.56. The shares fell nearly $5.00, or 22%.

The bonds had traded down to 54 and up to 57 during the session after closing at about 60 on Monday.

The SolarCity 2.75% convertible due 2018 traded down to 61.86, which was down from 73.50 to 75. On Monday the 2.75% SolarCity bonds had bounced around between 70 and 76, according to Trace data.

The company guided results lower in February, at which time the convertible bonds took a significant hit.

SolarCity’s quarterly revenue was $122.6 million, which was up from the year-earlier period. But SolarCity led a sell-off in the space on Tuesday after posting a larger-than-expected quarterly loss and lowering its forecast for the current quarter and full-year results.

The company expects a second-quarter loss of $2.70 per share to $2.80 per share, which is greater than its previous loss projection of $2.13 per share.

After light orders for the first quarter, the company has pared its full-year installed capacity expectation to 1.0 gigawatts to 1.1 gigawatts, which is down from 1.25 GW of installations.

Mentioned in this article:

EZCorp. Inc. Nasdaq: EZPW

PRA Group Inc. Nasdaq: PRAA

SolarCity Corp. Nasdaq: SCTY

SunEdison Inc. Pink sheets: SUNEQ

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